Trammell Crow lands $94M construction loan for spec offices in Fulton Market

The 300K sf “West End on Fulton” is slated for completion in April at 1375 West Fulton Street

May.May 24, 2019 02:06 PM
Grady Hamilton, managing director of Trammell Crow’s Midwest business unit with a rendering of West End on Fulton, 1375 West Fulton Market

Grady Hamilton, managing director of Trammell Crow’s Midwest business unit with a rendering of West End on Fulton, 1375 West Fulton Market

A lender is betting $94 million that demand for office space in Fulton Market won’t dry up any time soon.

Developer Trammell Crow secured the construction loan earlier this month on its speculative office development underway at 1375 West Fulton Street, according to Cook County property records. Nathan Zinn of CBRE Global Investors arranged the loan.

A CBRE spokesperson said the loan was provided by an “institutional investor” but would not identify it.

The Dallas-based development firm broke ground on the 14-story project in December, about two months after it closed on a $20 million purchase of the property from Economy Packing Company. The building is slated for completion in April.

At 300,000 square feet, the new building at the corner of Fulton and Ogden Avenue was designed to be large enough to attract major institutional investors while small enough to be viable as a speculative development, according to Grady Hamilton, managing director of Trammell Crow’s Midwest business unit.

He added the nearly nine-figure loan was “functionally necessary” to see the project through.

The firm originally envisioned an 18-story apartment complex for the site, whose alternate address is 235 North Ogden, but it “pivoted” its “investment thesis” after a closer look at market dynamics on the Near West Side, Hamilton said.

“It was a confluence of seeing the success enjoyed by other [office] projects, with the growing demands of tenants who are positioned for this use,” Hamilton said.

He added the decision was not motivated by the city’s Affordable Requirements Ordinance pilot zones, which had been created a few months earlier and which raised the number of required affordable units in any new residential development.

Developers have blamed the zones for making multifamily projects more difficult to finance, pushing some builders to scrap or switch up their plans.

“It had more to do with the strengthening of the office market than a shift away from multifamily,” Hamilton said.

The new office building will compete with millions of square feet of new office space under construction in Fulton Market, much of it clustered around the Morgan CTA station. But since tenants have already been identified for much of the new space set to enter the market next year, Hamilton expects Trammell Crow to have a leg up when it comes time to sign leases, he said.

Even with the city’s overall office market headed for a potential supply glut, developers are racing to create the kinds of spacious, high-amenity boutique workspaces they say tenants have come to demand.

Meanwhile, the owners of dozens of Downtown office high-rises are looking to cash out this year.

Trammell Crow named its building West End on Fulton, drawing attention to its pioneer status in the less-developed swath of Fulton Market west of Racine Avenue. But it’s hardly alone, as Sterling Bay and Shapack Partners both have picked up multiple nearby properties in the past several months.

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